SOME OF THE BEST METHODS TO CONSOLIDATE YOUR CREDIT CARD DEBT

Due to the global financial crisis many people have got in to credit card debt because they may have lost their job or losses due to investments that turned bad after the recession set in or several other reasons. Whatever may be the cause, the results is the same; you don’t have enough money to pay your bills. The only option that is open for you is to control your expenses and save money to repay your credit card bills as soon as possible. But, for those who are already on an extremely tight budget, doing this is impossible. If you are in such a situation, it is best if you consolidate all your credit card debt rather than paying it off individually.

The advantages of Consolidation

There are many benefits to credit card debt consolidation. In most cases you will get much better interest rates after consolidating your credit card debt or transferring your balance than what your previous credit card issuer was charging you. This is particularly true with home equity loans. If you have a huge pile of debt over your head, even a 0.1% reduction will add to huge savings every year; and these savings can be used to repay the principle amount of your loan.

Moreover, you will have to pay only one instalment each month which means that you only have to remember 1 due date and 1 creditor rather than remembering a host of due dates on many different loans or cards. Most probably, your monthly instalment will be lower, after consolidation than it was before you consolidated your debt.

Your credit score will also be benefited greatly by consolidation. By having several lines of credit active, you will be negatively impacting your credit report. Hence, when you close most of them, you will see a great amount of improvement in your credit score. But, make sure that you don’t close too many.

“Zero – APR Balance Transfer”

Another good way to consolidate your credit card debt is to search for a card that offers “zero percent balance transfer”. With the zero percent APR, your entire instalment will go towards repaying the principle and not the interest. If you cannot find zero percent offers, find a card with a lower interest rate; this will help you in the long run to pay off your debt.

While going in for a balance transfer, you should be careful with regards to the fees. Most of the good credit card companies charge some percentage of the transferred balance as fees. The fees will range between 3 and 7 percent. Choose wisely.

Take a “home equity loan”

If you have to repay more than $10,000, you should consider getting a “home equity loan”. These loans utilise the equity in your house to secure the loan amount. And since these are secured loans, you will get a much lower interest rate than on your credit cards. However, if you have a bad credit report you will not get this loan or the interest rate will be as high as on the credit card.